Auxly stock has been making a small recovery over the past week as the broader cannabis sector is showing early signs of bottoming out. Let's find out if it's the right time to be watching Auxly Cannabis Group Inc. (TSXV:XLY) (OTCQX:CBWTF).
New Agreement
Despite the recent troubles of the cannabis industry and the massive drop in stock prices from the highs in February and March, many companies are still working on important deals assiduously. Auxly Cannabis Group has been one of the more interesting companies in the industries for some time, and on Thursday this week, the company announced major deals with a local government. Auxly Cannabis signed a deal with the government of Newfoundland and Labrador by way of which the company will not only be able to sell cannabis, but also have the permission to produce it.
Additionally, the agreement will also give Auxly permission to open new stores and develop a production facility in the province.
Other than Auxly, there are only two other companies that have managed to reach such an agreement with one of the provinces of Canada. As per the deal, Auxly will supply the province with as much as 50 kilos worth of dried flowers in 2019.
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At the time of writing, Auxly stock is trading lower by 0.50% at $0.707 on the OTC market.
Next year, the company is going to supply a total of 1,000 kilos of product. There is an option to extend the agreement by a year.
While the latest deal is without a doubt a huge development, there was even bigger news with regards to the company sometime back when it landed a major partner. The British tobacco company Imperial Brands (OTCQX:IMBBF) invested $123 million in Auxly Cannabis Group by way of convertible debentures, and this partnership has the potential of propelling the company within the ranks of the biggest players in the industry. The funds are going to be used to expand the company’s business and ensure that Auxly is able to meet its strategic goals.
Imperial Brands, on the other hand, will grant Auxly the privilege of using its cannabis vaping technology for its products. That is an advantage that very few cannabis firms can boast of at this point in time.
Auxly stock has outperformed over the past six weeks, with a gain of over 30%.
Featured image: Canva
